Boston, MA 05/20/2014 (wallstreetpr) – TW Telecom Inc (NASDAQ:TWTC) reported first quarter 2014 results with net income of $9.8 million on revenue of $408.3 million and modified EBITDA (M-EBITDA) of $136.8 million.
Revenue
In first quarter 2014 (1Q2014), TW Telecom increased by 7.1% to $408.3 million (1Q2013: $381.2 million) due to the ongoing growth on enterprise revenue.
Data and Internet Services (60% of total revenue) increased by 15% YoY due to increasing use of products and services related to Ethernet and VPN. The increasing use of voice solutions also improved the revenue for Voice Services (19% of total revenue) during 1Q2014. However, Network Services (14% of total revenue) revenue decreased by 10.1% due repricing and increasing churn over larger carrier customers.
Sales grew as a result of strong bookings and expansion of its services during the period. The Company served ~30K customers and expanded its operation with the completion of ~33K fiber route miles. Also, the churn rate declined to 0.8% compared to 0.9% in the same quarter 2013.
M-EBITDA
TW Telecom reported higher network access costs, certain taxes and fees, and commission costs related to TW Telecom Inc (NASDAQ:TWTC)’s growth initiatives. It increased the overall operating costs, therefore, modified gross margin during the period was 57.5% (1Q2013: 57.9%). In addition, the expansion of services raised the SG&A costs that reflected over the modified EBITDA margin. The margin reduced to 33.5% (1Q2013: 35.7%) with M-EBITDA of $136.8 million (1Q2013: $136 million).
Cash flow
During 1Q2014, the Company reported capital expenditures of $94.3 million and strategic expansion related costs of $7.8 million that reduced the free cash flow to $10.8 million (1Q2013: $23.9 million).
TW Telecom repurchased $112.6 million of shares under its plan of $500 million and expected to continue the process for $249.9 million in the coming quarters. The Company managed to generate cash balance of $355.2 million and maintained the liquidity position with net debt of $1.6 billion with the leverage ratio (net debt/M-EBITDA) of 2.9x.
Conclusion
TW Telecom Inc (NASDAQ:TWTC) expects to continue its growth in managed services for enterprise through market expansion and product innovation. But, factors like repricing, churn, taxes, fees and capital expenditures on the ongoing projects may affect its operation.
